Will the ruble and lira sway next week’s rate decisions?

The latest moves in the Russian and Turkish currencies mean interest rate decisions due in both countries next week are on a knife edge. On balance, we think the Turkish central bank will raise its late liquidity rate by 100bp; otherwise, the lira is likely to come under renewed pressure which could force hikes further down the line. Russia’s central bank is likely to lower rates and, even if it doesn’t, the easing cycle is likely to resume later in the year and be larger than markets are pricing in.